Posted
by
timothy
on Tuesday July 29, 2008 @08:08AM
from the we'll-trade-cheap-software-for-cheaper-cheese dept.

Kensai7 writes "A quick comparison between same versions of mainstream software sold in the USA and the EU markets show a big difference in the respective price tags. If you want to buy online, let's say, Adobe's Dreamweaver CS3, you'll have to pay $399 if you live in the States, but a whopping E570 (almost $900 in current exchange rates!) if you happen to buy it in Germany. Same story for Microsoft's newest products: Expression Web 2 in America costs only $299 new, but try that in Italy and they will probably ask you no less than E366 ($576!). How can such an abyssal difference be explained? I understand there are some added costs for the localized translated versions, but I also thought the Euro was supposed to be outbuying the dollar. Where's the catch?"

I suspect you're right. Government taxes is the reason. It's the same with gasoline. We Americans, Canadians, Europeans all pay the same amount for gasoline (approximately $3.50 a gallon), but American/Canadian taxes are only ~50 cents whereas European taxes are $3-4 dollars.

So the final price is inflated because of government theft.... er, taxes.

Actually, these price diferences are true not only to software but hardware as well. And the value has nothing to do with the versions being localized.

In fact, the price difference applies across the board. Pretty much everything in American is just dirt cheap.

(Which is why, when we're passing through the US lat this year, we'll be arriving with two empty suitcases each and leaving with them stuffed full of clothes, electronics, and the like. The money saved over buying in Europe or Australia will pay for a non-trivial portion of the trip.)

It's still a lot cheaper. In fact, if you get a good deal on flights and are buying, say, a few thousand dollars worth of "stuff", it can end up cheaper to fly from here in Switzerland (or the UK, as I have friends there who do the same thing) to the US and shop there.

Import duties for most things in Switzerland is less than 10% - that's assuming you even get checked at customs.

Of course, then you'll see the real difference - spending the U.S. price plus tax, instead of the localized price plus tax. (What, you thought they included tax in the listed price?)

To give an example, a 16G iPod touch here in ZUrich costs CHF 580.-, which is about UDS560. A 16G iPod touch on apple.com is USD400. Decent clothes are (relatively speaking) cheaper still (and will come in reasonable sizes).

Another example is pushbikes, which for some reason they are crazily expensive in Switzerland. I know several people here who have saved well over CHF500.- by importing a bike from the US completely above boardand paying the full customs charges and duties.

Stuff in America is just cheap. This covers everything from consumer goods to services (10 minute taxi ride here can easily set you back USD40+ - it's about USD7 just in flagfall).

It's going to get even more dramatic over the next 1-2 years as the US$ continues to tank.

I was talking to a former Sun employee the other day and he explained to me one of the stresses of his former job.

The manufactured an external drive which worked with most systems just fine, but on some required an extra piece (I want to say a termininator). In Europe due to environmental legislation there was a requirement that useless or unneeded pieces can be returned to the manufacturer to prevent them from simply throwing them away. That would have been a logistical nightmare so they simply made up another version that came with it, and one that didn't.

In the end this mean they had three different product codes for almost identical boxes all of which had to be manufactured and kept in stock, one for Europe with, one for Europe without, and one for everywhere else. Tell me that doesn't add some overhead cost?

Maybe to 3rd world governments, not in retail.. M$ Office 2007 Professional goes for R$1599.00 in retail stores in Brazil, thats a little over 1k US dollars!

That's because nobody who needs Office Profession buys retail copies. The Home Version of Office costs R$ 200, which is US$ 130. Very cheap, if you consider that most brazillians spend from R$ 1200 to R$ 2000 on their computers.

Companies buy Office at bulk prices, which range from R$ 700 to R$ 200. Considering that the employee using the software cos

The reason is that the companies create artificial monopolies by creating sole distributorships in each country. On top of that, name/brand recognition goes a long way in semi-First World countries like those in Europe, so something like DreamWeaver is going to gather a lot more interest than XMLSpy (or what have you). So you have a market focused on one product, and only one supplier of that product. The math is pretty simple; consumers lose out to asymmetric market forces.

It's not just "because they can", but it's actually the market that has created those conditions. If Europeans would wake up to the alternatives (like China and India have), software prices would be much more reasonable.

The poster above already nailed you, but I'd love to know what the "alternatives" that India and China have "woken up to" are. I assume you mean people buying one copy of the software, cracking it and distributing it on omnibus DVDs for $5 a pop out of a suitcase?

But then, you are right, when I was living there the first 25 years of my life, we used to sit on trees and hunt mammoths with hand-axes, while our neighbours were struggling with the fancy new walking-upright industrial norm.

I was wondering about that sort of thing. The EU tends to side with customers a lot more often than the US does and there are a lot of rights that are available in the EU when dealing with consumer protections that I don't believe we in the US get.

So there is going to be a higher cost for software in the EU in order to offset that. What I don't get though is why the cost difference is apparently that high.

That's just as much BS as their old excuse for shipping things to Europe despite being closer to China where all the electronics are actually made and Microsoft makes their EU discs in Ireland so the cost is minimal for shipping.

As far as translation...for starters they never actually give you software that uses British English so we see no benefit in it and do you think they get "file", "save", "copy, etc translated for each version? A previous employer of mine only paid approx. Â£110,000 to get a whole book translated into about 26 languages. It was a small company so they certainly didn't get a good rate. Now if Microsoft or Adobe somehow pays double that, that means they only have to add Â£1 per disc if they sell 220,000 copies which they will. There is no excuse for something that should cost us Â£150 to cost Â£300 (or more).

The only reason they do it is to boost their profits because European currencies are worth more than the dollar. So they abuse their positions to sell over priced software to help their bottom lines. That's the only reason.

This is also yet another reason why I use products like Open Office and Gimp. Honest companies, like JCreator, will get my money too seeing how they don't try to rip me off for not living in the US.

Europe is economically much different from the US. It's not behind the US in any way. Per-capita GDP in the US is in the low 40kUSD range. Per-capita GDP in the EU was above 40k dollars before the ten-country admission in 2004 that included lots of former soviet states. It is now lower, (35k if I recall correctly) but will naturally correct as the EU absorbs the former soviet republics (which had staggering low productivity).

Europe is different. More bureaucratic, with softer growth surges and almost no recessions on record. I don't know if it is better, but it's definitely not a worse economic environment.

It's mainly because they blew all their infrastructure up in WWII[snip]

The Marshall plan took care of this in two decades time. Great effort by the US btw, and definitely the kind of diplomacy a modern capitalist society should use and abuse (instead of classic brute-force-diplomacy)

, but also because of anti-competitive protectionist legislation.

The EU abolished most protectionist legislation between countries in the EU. Intercontinental protectionism is on par with the US.

"Semi-First World" may be an overstatement, but there is some truth to it.

The only revealed truth is that the author couples a sense of superiority with major ignorance about the rest of the planet.

No no no! You are basing your opinion on PPP [wikipedia.org], purchasing power parity, that is totally useless way to measure economies. The right way is to use raw money that is GDP nominal. So the right source that we should be looking is the list of countries by GDP (nominal) [wikipedia.org]

Unfortunately some asshole has removed once again EU from the list and other idiots are using PPP figures in the article telling about the economy of the Europe [wikipedia.org]. Fortunately GDP nominal per capita can be found from the article about the European Union. [wikipedia.org]

Here is short list of countries. It includes besides USA, EU and Japan notable EU countries below US GDP per capita and EU countries over the US. What can be seen from this list is that European countries in general have been gaining against both USA and Japan and some small countries have leaped over them. If we would have more recent figures that would take into account the decline of US dollar the numbers would favor even more European countries. So all in all, by GDP per capita nominal, we can conclude that all the countries in the list are more or less first world countries.

Actually, I don't think PPP is out of line on this. Or at least the way the comment was stated.

If I make $100 and you make $50 a year, and it costs me $60 a year to live while it costs you $30, Who has more money? You do because you can buy more for your dollar then I can. If you were to move to my country on the same income, you would be $10 shy of being able to survive. But if I went to your country on the same income, I would be making twice as much as you after living expenses.

Ah-HAH! But by insinuating that his own insult applies to him, you are also saying that all of his reasoning skills are impaired! Are you are thusly a pot-kettle-thingy yourself! And me, too! Oh, and anyone that points out my fallacious logic! Gotcha!

Again tax figures taken from wikipedia, so I expect that there are things I'm missing.
By comparison someone earning £20,196.51 ($40k) in the UK can expect to pay 3575.30 income tax (20% of (gross - tax free allowance)), + health insurance tax of (gross-(tax allowance*weeks))*rate = (20,196.51-4264)*.11 = £1

One has to remind oneself that the image the US gives itself internationally mainly comes from the people on the "lower" end of the intelligence or/and educational-scale from time to time.Actually, I have never actually meet anyone idiotic from the US. In my experience, most you meet are nice, intelligent and well informed people, so I assume that the idiots simply are a very vocal minority.

One have a tendency to remember the bad experiences better than the good ones, though. =(

I think you're right - and wrong.
I'm a British (well English) person so I count as well Europeansish I guess. Well I can talk the same language(ish) as Americans - but politically more aligned with 'Europe'... I guess.. Well actually my political compass seems to point to 'left-wing' libertarian - so left-wing swing to Europe, but US libertarian seems to be right wing... and and and....
I think the take-away point is that everybody is unique and tends to get painted by others by the country they belong to.

weirdest international experience I had was 2 weeks in Atlanta Georgia. Flown in for 'critical problem' but than dicked around for 2 days before I got to meet 'the important person' (who then sortof mentioned an hour in the problem had been solved)
Still I did managed to pick up 2 invites from co-workers to churches on the Sunday - seemingly my non-existant soul was of a greater concern to the average American corporate drone.

I would argue that the United States has become a semi-First World country. We have lost our manufacturing base, our strong middle class is rapidly diminishing and the gap between the poor and rich is widening.

A First World country is one that supports capitalism and the western world against the Soviet Union and its allies. So yeah, we're a semi-First World country now, since there's no Soviet Union to oppose.

There are thousands of Windows distributors in the US. Though MS might be the final arbiter of who gets to distribute MS products, they rely on widespread distribution networks to provide the constant revenue stream they need to stay in business.

With foreign sole distributorships, the only stipulation is that the distributorships provide a certain level of sales and income back to MS (for example). So within the country, the sole distributor sells the product for at least cost, then adds in his cut, then pumps the price up because he has no competition to drive his prices down.

Since the sole distributor acts as a monopoly within the country, the retail outlets have to bear the cost that the distributor charges, and the customers have to bear the costs passed down from the retail outlets.

Yes, it's capitalism, and it's grounded in well understood economics. But it isn't "Supply and Demand at work" in a free market sense.

Actually, I'd say the EU is what the US was intended to be. A group of allied separate "states" (meaning "countries") with a political governing body that can consider the interests of all the states in the union.The US may not be that anymore (if it ever really was), but it was definitely the intention.

I do note from time to time people saying things like, "I am a citizen of Texas" or so on - I actually applaud that sort of wording, as it is closer to the original intention. "I am a citizen of the US" wo

I agree that there is no complicated reason, but there is reason more than 'because they can'.
Example:
Italy doesn't want money leaving there economy, so they tax such imports heavily to offset the economic loss. On the other side, US software companies know the game and charge more yet because there aren't many alternatives, thus driving taxes even higher.

Spot on. I work for a technology company that sells both hardware and software in the US and Europe, and our European prices are nearly 80% higher than our US prices, which means that even at absolute values our equipment costs more Euros than Dollars. Why do we price our products so high? Because we can. We found that Europeans are much less price sensitive and much more willing to be early adopters; in the US our customers know what features they need and are unwilling to pay for anything extra we throw into the mix. You could almost say that in Europe people purchase new technology for the sake of technology, while in the US people view technology as mere work tools.

The only new member states in the Eurozone are Cyprus and Slovenia, so I doubt it skews the figures that much. Poland, Romania, etc. hadn't adopted the Euro last time I checked.

But, yes, you make valid points. The USA does seem to have more dead-end make-work jobs (store greeters, fuel station pump attendants, etc), and it would be interesting to know how that compares to having more people on benefits in practice. I doubt we'll ever know, though

I think that the real reason is because they can, and we dumbass fuckers are (somewhat) prepared to pay for it (piracy is higher here than in the US).

I have personally written to Adobe complaining about the massive price differences, and Adobe wrote back claiming it was because of localisation costs (translating software plus documentation into 20 languages can be pricey).

BUT, the bastards are lying. The localisation of any piece of major software is now a matter of course. It's planned in right from the very beginning.

To the wankers from Adobe reading this forum, I think it's about time the EU took a look at this practice.

I'm really fed up of the VAT argument. Yes, it's higher, but with other taxes and costs is levels out anyway. Plus, 10-12% more tax does not mean you get to charge 100% more for your product.

It's out own fault for tolerating it. I don't know about the rest of Europe, but they call Britain "Treasure Island". There has been a blacklash in recent years, but not a very effective one, and in the process we seem to have forgotten the value of quality.

Your argument is laughable. I get the feeling you don't understand what racism actually is, since this clearly isn't it. Something is worth what people are willing to pay for it, so that is what companies charge. With your plan, it wouldn't be possible for companies to subsidize their product in developing countries. Do you hate people that live in countries less affluent then your own?

This is an interesting example of just how borked econometrics get by social factors: There is no conceivable quantitative economic mechanism by which the European market demand would justify a price 3 times higher than the North American market. That only leaves qualitative/fuzzy social factors as the explanation. And that, of course, throws any quantitative analysis of the market using econometrics right out the window.

Software may be exceptional because it is unique as a product in that it has close to zero variable costs (ie: same cost to make one copy as 1 billion copies). But personally, I don't buy this. I think most markets are similarly borked by social factors - everything from the price of movies to the price of shoes to the price of legal services. The price really is 'whatever the market will bear', but what the market will bear has very little to do with the actual costs of production in any industry.

Now think about what this means: if prices correlate poorly (or not at all) to costs, that means the industry in question is not competitive. If there were legitimate competition, there would be perpetual downward pressure on prices and everything would be priced just a little more than it costs to produce. Now think what else this means: any industry with profitable prices (ie high margins) cannot be genuinely competitive. One of the defining characteristics of a free market is that consumers are not coerced by force or fraud, where a lack of competition constitutes coercion (think of a monopoly jacking up prices because it has no competitors...).

Marginal utility analysis assumes commodity-like uniformity of products and services AND free and open competition. Remove these assumptions, and much of the analysis collapses. My point, for those not paying attention, was that analyses of markets using traditional econometrics (of which marginal utility is one) is ineffective in markets that are not competitive. Moreover, I argued that highly profitable markets are - by definition - not competitive.

Did he take into account that European prices usually include taxes that are sometimes excluded in the list price in the US, one wonder?Also, I assume that most countries have import-taxes on software too...

Probably won't make up for all of the difference, but I expect that the US prices don't include sales taxes etc...

Value added tax, the EU counterpart to sales tax, definitely doesn't make up for all of it. As I write this, Google says [google.com] the euro is 57 percent higher than the dollar, but a typical VAT in Europe is about 20 percent. Or have European governments enacted Brazil-style prohibitive tariffs on imports of copies of proprietary software?

Probably a little bit of that, a little bit of benificial up-rounding, and a lot of not adjusting prices down as the dollar falls (I bet the EUR prices were set when the USD was worth more than EUR, and not adjusted since.

The cost of localizing everything is not inconsequential. You can't just run it through a translator and go and you still have to do acceptance testing on the localized version. The number of German or Itallian consumers is small compared to those who use English and the price reflects the marginal production costs per unit.

The parent post is modded funny, but it should definitely be informative instead. As a Canadian writing heavily regulated documents in the UK, I have been continually amazed at not only how many small differences there are between US and UK English (I find and replace all 'z's as a starter) but how much the English care. We have had applications rejected for being too "American". The culprit? Spelling!

Converting from US to UK English is a non-trivial task, and one of more subtlety that most would give it credit. I am by no means justifying the price gouging, but there is some work involved to make it happen.

As an aside, it doesn't help that the car-wreck that is Word does not pick up on many American words that have UK counterparts. I currently have 30+ in a special dictionary that are always marked as mis-spelled (whether the document is formatted UK or US English). Those words always got me into trouble because they looked right to me!

It is localization in the UK as well. The preferred ending according to the OED is -ize although -ise is acceptable and seems to be very common in modern usage. An Inspector Morse episode once hinged on the fact that en English professor would not write a suicide note using -ise because -ize is the more correctending. This is why I always get really irritated with spell checkers: the UK versions refuse to accept -ize as valid.

Very easily. The US and Europe are different markets. Analytics for pricing have shown time and again that Europeans and Britons are willing to pay more for consumer electronics and for software. Hence, suppliers charge more.

As time goes on and the "global" market homogenizes, this will change. But until then, pricing decisions based upon local markets will continue to create situations like those described in the summary.

As for the reasons that Europeans are willing to pay more, any input I'd have would be speculation. The fact that the development of most commercial software happened in the US (historically, not necessarily presently) probably has something to do with it.

For example, the game Rock Band for Xbox 360. It costs USD 150 (~ euro 95) in USA (on Amazon.com) and SEK 1990 in Sweden (euro 211 or USD 332).
It's more than double the price!!! Did we get anything extra? NO! Oh yes, sorry, we had to WAIT more than 6 _months_ for a European release, which didn't bring anything new/better compared to the American version. FU EA!

Actually...pricing your product based on what people will pay IS the Supply Demand & Blah Blah piece. I am terribly amused when people come out crying about these price differences. The fact is...an item will be priced to maximize revenue. Very simple economics. You have consumers * price = revenue. You increase the price and consumer goes down, you lower the price and consumers goes up, this ultimately is a very simple mathmatical problem of maximization and it blows my mind that so many "geeks" a

then don't buy it. if the price is too high, then they have priced it out of your range. deal with it.

Movie theatres set different prices during the day. Loyal customers get given discount coupons by many companies. Some places let the unemployed, or retired, or disabled people in cheaper or even free. Some bars let women drink for free, some events let people in free in fancy dress, some places give discounts to members of the armed forces.

NOT EVERYONE GETS OFFERED THE SAME PRICE.

There is no major news here. Sorry if that deflates the slashdot readers attempts to justify theft though, as 99% of stories on here attempt to do.

Because Free Software is more popular in Europe, the commercial software companies must make up for the lost stales by increasing prices.
If those damn users would only stop using Free Software, the price of commercial software could come down to a more reasonable level.

Sure, the US price probably doesn't include VAT while the European price does. So let's take those 20% (roughly) of the European prices: that will be $720 for Dreamweaver (1.8 times US cost), and $460 for Expression Web 2 (1.5 times US cost). And I've checked with a local retailer; those are prices for non-localized versions, so that excuse does not apply.

The catch is that we are being ripped off, plain and simple.

Incidentally, the same is true for books. Books are ridiculously overpriced here, and for scientific or technical books it is _always_ _much_ cheaper to order them from Amazon than to buy them from a local bookstore. Even including transportation cost, the difference can be well over a factor two!

Same items in different countries do not cost the same amount when taking into account only the exchange rates.

There are several reasons for this. A couple that are easy to explain are:

The price of a good is what the market will bear. If the people are willing to pay more in the UK then you can expect the price to be more in the UK. (And as an American living in Britain for the past month... man can I tell you the Brits are willing to bend over and take it.)

The prices of products are affected by taxes. The prices you quote for the UK have something like a 17% "Value added tax" reflected in the price. The US prices you quote do not reflect possible sales tax which can be as high as 9.4%. While those two don't account for the entire price difference for Dreamweaver there are other corporate taxes and trade tariffs that remain unaccounted for.

Do you think national healthcare is free?? Where do you think these countries get the money for that and other social[ist] programs? They tax the hell out of companies, imports (and individuals)

Don't worry. With the current US economy suffering from too much spending, already high corporate taxes, soon to be way higher taxes, mismanaged and over-promised social[ist] programs, a falling dollar and interest rates designed to trick people into thinking everything is ok while causing inflation to skyrocket it won't be long before the prices you mention even out for us. Maybe even compared to Zimbabwe.

It's the same thing with Canada; identical products will cost 10% to 25% more, and in some cases, like automobiles, manufacturers will go to extreme lenghts to insure that canadians cannot buy stuff in the US and import it themselves.

Having worked for European companies in the States, I think it's a "business culture" thing. Europeans tend not to be as price-conscious when making business related purchases. US companies will fight until the bitter end negotiating over a few dollars, so software companies know they have to price competitively.

Not quite sure what drives it though; Europeans can be tough negotiators on most contracted services.

Take an example from my line of work -- air transport. Business class tickets sell very well in Europe, mainly because it's considered a perk once you get to a certain level. With the exception of consulting companies and others that can bill away expenses, most staffers and lower managers in the US ride in coach. Business and first are reserved for senior management, and even that requires justification when times get bad. If you're a road-warrior staff member, and fly legacy carriers, you'll eventually get to a point where (through FF miles) you're upgraded to business, but I've never worked for a company that would pay the extra money for a business class ticket, even on 17-hour torture flights!

The governments of Europe hassle companies (in general) more than the US does. This hassle has a cost. The cost is reflected in the price.

Let me put it another way: Adobe considers it worth their while to sell Dreamweaver at $400 in the US. After all the hassle, they consider it worth their while to sell Dreamweaver for $900 in Europe. At $400, would it be worth their while to sell Dreamweaver in the EU at all? Maybe not.

Let me put it a third way: go on eBay and you find that a lot of US sellers won't ship outside of the US and Canada. Why not? Because it isn't worth the hassle. Would it be worth the hassle if the seller could check a box which said, "double price outside North America?" Maybe so.

Don't get your knickers in a bunch just yet over the price difference. What we have here amounts to a single data point in time.

Perhaps a better question to ask first is "How has the price of software in Euros changed over the last couple of years?"

Why ask this? You are converting prices back to US dollars. The value of the US dollar as compared to Euros has been declining for the last couple of years.

IF the price has been relatively steady (I don't know if this is the case), and people are comfortable paying this price, there is less incentive for US companies to lower the price of their software in Europe. If the Euros are converted into US dollars, they would be keeping more $$$. It's their software, they can charge what they choose.

This only addresses part of your question. Since one US dollar has been worth less than one Euro (at least for the last five years), the price at any point in that period (assuming a relatively constant Euro price of software), would still be higher.

There is probably some holes in my reasoning, but I am sure smarter souls will be more than happy to correct me.

Back in the 90's when I was shipping software to Europe, the price I'd charge the wholesaler was the same I'd charge local wholesalers. Getting through customs however, wasn't trivial. Import duties in the 90's which were separate from VAT were running around 15-20%. The wholesaler paid that on top of the price he paid us and added his markup which he passed on to the retailer. The retailer turned around and added his markup to the price he paid which included the duty cost plus the wholesaler's markup on the duty cost. By the time it got to the customer, the customer was paying markup on markup on duty plus regular retail-wholesale markups. What initially appeared to be a relatively small duty cost mushroomed into a sizable burden.

I was talking to one of the wholesalers about it and he laughed it off by saying 'yeah, but we get trains!' He'd then piss and moan about his more savy customers buying directly from retailers in the states and avoiding the double markups. That of course, reduced his market which meant he raised his prices more to cover his fixed costs.

Another factor driving prices in Europe was the fact that we'd sign exclusive distribution agreements so a wholesaler owned the market for a specific country. We did that because the wholesaler handled the translation and marketing costs in the specific country (we were a small company). Since he was the only source for a product, there wasn't any price competition. Here in the states, we'd wholesale with 5-6 distributors and those 5-6 companies were cut-throat with each other. The ones who couldn't compete on price, didn't survive.

Back in the 90s on Usenet I used to tabulate and compare prices between MacWarehouse's UK and US catalogs. I'd subtract the VAT to ensure the comparison was fair. The result showed markups of 50-100% on a regular basis.

In most cases, any localization done was incomplete. For example, ClarisWorks still referred to "color".

As I recall, the #1 winner was Dave Winer's Userland Software. Their Frontier product had something like a 200% markup in the UK, and zero localization performed.

I actually contacted some of the winners about their UK pricing. One company told me that the markup was because a small number of distributors controlled the UK software market, and those distributors were the ones setting the prices.

It's worth noting one of the side effects of this practice: my experience in the 90s was that everyone ran the US version of Mac OS and ordered their software from the US in order to save money. This indirectly killed the market for Mac software in the UK.

Also, the BSA used to estimate software piracy by comparing the number of people running (say) Microsoft Word with the number of UK sales of Microsoft Word. So the gray market meant that US piracy stats were depressed, and UK piracy stats were artificially inflated.

(I was going to link to some of my 1992 Usenet posts, but Google Groups doesn't seem to have them.)

the disparities have fueled a growth in open source software and their alternatives. And, as a result, some very good alternatives have come out of Europe. Enough that some companies like MS have set up lobbying efforts there to try to stop governments and businesses from adopting the alternatives (why would they cut the price, it's not their "way").

That's not quite true of course. Anyone who had the choice of paying $1 or $100 dollars for the exact same product would pay the lower price.

However, we are allowing ourselves to be trapped legally. It costs the same to make product X in the US, as it does in the UK, as it does in Russia - if that product is intangible. But we are not allowed to buy software from Russia at 1/10th of the cost. Global companies are allowed to go there and sell, but we cannot go there, as consumers, and buy.

If we could buy from any market, we would buy from the cheapest. So this is not truly 'charging what the market will bear'. This is 'forcing the highest possible price for (sometimes necessary) products in every market we can reach, and tying the hands of the consumer on that.

It's another example of the disproportionate price fixing that we face in the digital age.

One thing often forgotten (which doesn't explain the examples, but many others) is that in Europe, prices are always (AFAIK) given with taxes, while in the US they are (AFAIK) without. Since sales tax in Germany is 19%, that explains quite a bit of difference already.

Ah, yes. The 'rock band' excuse.

TCO rock band video game USA: 85 UK pounds.

TCO rock band video game UK: 185 pounds.

Explanation? Value Added Tax (17.5%) and 'shipping'.

Shipping?!? Whip out your bullshit detectors now folks, because these things are made in CHINA.

In Australia, we have a 10% GST, but our dollar is reasonably strong these days compared to the US dollar.

For years we've been getting ripped off on video games, historically, the excuse has been shipping, but I'm not sure if I buy that at all anymore, after all, I'm sure most duplicating and printing is actually done locally these days rather than being shipped from the US/Europe/Asia... as proof of it being a case "what the market can bear", and not shipping/taxes, games available on Steam offer a great example.

Bioshock got discounted recently on Steam, in the US it's available for US$14.99, but if you're in Australia, you'll be paying US$24.99. Does it cost Valve/2K Games more to sell the game over here when there's no shipping involved, or is just because in Australia we're used to paying more for games? This isn't the only example of the same kind of thing happening on Steam, but it's the most recent one that I can think of.

Oh, and the "Rock Band" example, TCO for Rock Band over here using the cheapest example is going to be around AUD$400, at current exchange rates, that's USD$380... oh, and it's not even being released before Rock Band 2 is released in the US.

(And no, I have no intention of paying $400 for Rock Band, that's crazy, but as long as hardcore gamers keep buying it for that price, that's what we'll be paying).

Yep, VAT (sales tax) is never included on prices given in the US. You have to wait until you check out to find out how much sales tax you have to pay. In most EU countries (and the Middle East) VAT is included in the sticker price.

In addition, don't forget about import tax that the local country may charge on top of VAT. I'm currently living in Amman, Jordan and VAT is 16%. On top of that the import tax for goods from America, Europe, Japan, etc is close to 24%. That's 40% extra that has to be paid above the US price (which is not discounted).

The usage is, oddly enough for Slashdot, correct, though uncommon. Abyssal, in addition to meaning abyss-like, means unfathomable. Plus it raises the image of an abyss, which is rather appropriate, given the discussion. On the other hand, abysmal is much less appropriate because that simply describes the situation as being bad, rather than emphasizing the vast difference in price.

Depends on the model. For a tech that's happy to fix all their own issues, and do tweaking of config files in an editor and really get under the hood, then the cost of software is going to approach zero.However, for almost everyone else, they want to know there's someone out there to phone when things to wrong, who is knowledgeable enough about the product to fix the issue. That's part of the cost you pay in Software, the 'maintenance lifecycle' part. Your software will slowly be improved, or fixed.

...and despite what anyone here might like to believe, Microsoft is making money hand over fist, with profits rising all the time. If selling software is dead, why is the industry making so much money selling software?

It is clearly true that copying software, once it has been created, is essentially free. However that ignores the fact that software costs a lot of money to create. If there is no financial motive to create software, very little software will be created.

Microsoft make money because the market has not matured enough yet... They also snuck in through the back door as the hardware market was maturing - people went for the cheaper more open hardware, and overlooked the impending software lock-in because it was a relatively small cost compared to the benefits of cheap open hardware from multiple vendors.

As for your comment about little financial motive...There are many ways to make money that don't involve directly selling software. IBM and RedHat make a lot from support, Many companies make a lot of money from hardware, while investing in making free software (including free as in beer like drivers).

And your claim that very little software being created without someone hoping to make money from selling it, just look at how much free software is available, there is a truly insane amount of software available for free these days.